U.S. Renal Care Will Pay $7.3 Million to Settle False Claims Charge

U.S. Renal Care will pay $7.3 million to the federal government to settle a whistleblower lawsuit brought by Laura Davis, a nurse. Ms. Davis alleged the company U.S. Renal Care acquired, Dialysis Corporation of America (DCA), overcharged Medicare for years for the anemia drug Epogen — used to treat dialysis patients. Her lawsuit alleged that DCA was billing Medicare and other government health care programs for more Epogen than was actually used.

The Department of Justice investigated the allegations and joined the lawsuit. The lawsuit was filed under seal in 2008 and not made public until last month. Epogen is used to increase the red blood cell counts of kidney dialysis patients, many of whom are anemic. It is packaged in small vials. To administer the drug, health care staff withdraws Epogen from the vials using syringes and inject it into patients’ blood during the dialysis process.

When a drug in liquid form is packaged in a vial for withdrawal with a syringe, a small volume of the drug typically adheres to the inside of the packaging, making it impossible to withdraw the full amount of the drug from the vial with standard syringes. To ensure that providers can withdraw the purchased amount of the drug from the vial, the manufacturer, Amgen, fills the vials with approximately 11 percent more Epogen than is stated on the label. That extra 11 percent is called “overfill.”

The manufacturer doesn’t charge extra for the overfill because it can’t be recovered using standard syringes, so the overfill is thrown away along with the vials. DCA billed Medicare for not just the Epogen the patients received, but also for the overfill that remained in the vials. This was even though DCA used standard syringes and did nothing to ensure that it was actually withdrawing and administering any overfill. At one point, reimbursement for Epogen use accounted for more than 25 percent of DCA’s medical-services revenue. Hasegawa said that “since the patients didn’t receive the overfill, DCA shouldn’t have billed Medicare for that amount.”

Ms. Davis filed the qui tam lawsuit in 2008 in federal district court in Baltimore, Md. She is a registered nurse who worked at one of DCA’s dialysis centers in Georgia. DCA operated more than 35 outpatient dialysis facilities and was acquired by U.S. Renal Care in 2010. Ms. Davis raised concerns about DCA’s billing practices for Epogen internally, but no one listened to her. In fact, the bosses ”thought she was a little strange to care that the government was being overcharged,” according to reports.

Roann Nichols, Assistant U.S. Attorney for the District of Maryland, and Arthur Di Dio, trial attorney for the U.S. Department of Justice, worked on the case with the primary lawyers. Ms. Davis was represented by Stephen Hasegawa, a partner at Phillips & Cohen in San Francisco., D.C., who had this to say:

This case shows how taxpayers benefit when government attorneys work closely with whistleblowers and their lawyers to stop fraud and recover government funds.

All of the lawyers in the case for Ms. Davis and the government did very good work in this case. It’s a prime example of how important whistleblowers are in the battle to combat corporate fraud.